Cracks in the Foundation? Jamie Dimon Calls Out the US Fiscal Mess.

• The JPMorgan Chase CEO detailed a host of challenges facing the economy

• Risks ranged from near-term worries to long-run threats, primarily the result of an inept federal government

• Allio offers color and depth to Dimon’s critiques, along with strategies for investors to adopt as a great macro recalibration unfolds

When Jamie Dimon speaks, markets listen. The chief executive of JPMorgan Chase (JPM) chatted with the media at the Reagan National Economic Forum in Simi Valley, California, to discuss a wide range of macroeconomic issues. “America’s CEO” is not one to mince words, and he often casts a sobering, if not ominous, tone when describing the current geopolitical landscape. 

We profiled Dimon’s one big risk in 2024. Geopolitical unease and growing divisions between nation-states have the potential to spawn black swan events with little warning. While we have not seen a major eruption recently, intensified trade tensions and soaring global debt levels could further promote a society of haves and have-nots. That was just one of many topics Dimon delved into in May. Ironically, the fireside gathering came as stocks polished off their best month since November 2023.

The All-Country World Index Soared in May, Notching a New All-Time High

Source: Bloomberg

But as Jamie outlined all that could go wrong, the S&P 500 took it on the chin, dropping by more than 1% in what was otherwise a quiet tape. Stocks bounced back by that session’s close, but could a more protracted downside catalyst be in the offing? 

Well, of course. Corrections, bear markets, and even crashes can strike at any time. Key, though, will be if the banker’s prophecies come to pass. We’ll suss that out today.

The S&P 500 Fell Intraday as Dimon Spoke, Recovered to Close out a Strong May

Source: TradingView

At Allio, our portfolio management team is constantly on the hunt for what could disrupt the macro balance. Economics, policy, and politics lay capitalism’s foundation, and when one of those x-factors is upended, volatility ensues. We don’t agree with all of Dimon’s takes, but we do assert that investors should always be on guard for new opportunities, emerging risks, and long-run growth drivers. It’s part of our ethos to put investors first so they can think bigger and act decisively.

So, let’s shed light on and put context to Jamie’s comments; he may have tipped over into fatalist-territory on a few issues. With a proper understanding of the macro state of play, we can better frame his outlooks and make risk-focused investment choices. Here’s what you need to know:

1. Bond Market Risks

Are there cracks in the US Treasury market? Audience members were left pondering that almost existential question by the time the event wrapped up. The JPMorgan CEO warned that at some point, perhaps within ‘six months or six years,’ there will be a comeuppance regarding our nation’s sovereign debt. Making this prognostication so poignant was that it came just days after a steep rise in long-term Treasury yields.

The US 10-Year Treasury Term Premium’s Rise Underscores Fiscal Concerns

Source: David Ingles, Bloomberg

Following the House of Representatives' passage of President Trump’s One Big, Beautiful Bill, the bond vigilantes emerged from the shadows, selling the long bond and driving up interest rates to above 5% on the 30-year. Then, just a few sessions later, disorderly selling in Japan caused its 30-year government bond to eclipse 3% for the first time. 

We agree that excessive government spending, gone unchecked, can put the US fixed-income market into a tailspin. Is it an “inevitable crack,” though? Not in our view. We assert that expansionary drivers, such as AI innovation and pro-growth policies, which are already being filtered through the domestic economy, can sustain the country’s finances...for now. 

Most Americans are probably disappointed that the Department of Government Efficiency (DOGE) hasn’t made a larger debt in cutting federal waste, but that was just the first step in tackling what is clearly a spending problem, not a revenue problem. 

DOGE Savings Less than Hoped For

Source: DOGE

Dimon also waved a finger at the US Federal Reserve for its yearslong quantitative easing, but there has been progress on this point. Through quantitative tightening, the Fed’s balance sheet has shrunk from $9 trillion to under $7 trillion. It would be healthy to see that total decline further, but Chair Powell’s hands may be tied given much higher interest rates today compared to a few years ago.

Fed Balance Sheet Is Working Down

Source: St. Louis Fed

Dimon rightly emphasized the need to change the trajectory of US federal finances; credit rating agency Moody’s made the same point recently. The upbeat news that was left unsaid is the corporate, household, and even municipal balance sheets are just about as good as they have ever been. 

Household Balance Sheets Remain Robust

Source: BofA Global Research

2. US-China Trade Tensions

Harking back to our Q4 2024 missive on Dimon detailing geopolitical landmines, he was not shy about offering fresh thoughts on the trade war. A “potential adversary,” he dubbed China, not the “primary threat.” President Trump and many others have targeted Xi Jinping and his government above other adversaries, but Dimon urged policymakers to engage constructively with the world’s second-largest economy.

Ironically, the interview occurred just hours after Trump put out a Truth Social that, in all caps, said China had “TOTALLY VIOLATED ITS AGREEMENT WITH US.” So much for being Mr. Nice Guy, he closed the post with. Jamie is clearly no fan of steep tariffs directed at China, noting that high duties will only embolden its “well-prepared” administration. 

No More Mr. Nice Guy: Trump’s Truth Social Tape Bomb Before Dimon Took the Stage

Source: Truth Social

Dimon has supported many of Trump’s economic policies, but this is a topic about which he seemed to intentionally diverge from the Trump 2.0 agenda. Could it lead to other corporate leaders coming out firmly against the current trade policy? It’s possible, and a divided private sector tired of gaming out the Tariff Man’s moves could be a volatility catalyst.

Jamie ignored cracks in China’s economic foundation, though. Their financial system is plagued by deep-seated fraud, corruption, and unsustainable debt-fueled growth, far worse than the challenges America faces. Their demographics remain in decline, and China’s 24-member Politburo relies on hiding the nation’s failures, and the world may finally be taking notice and action.

3. The Enemy Within

China is obviously in the president’s crosshairs, but Dimon stressed that the US’s biggest threat may lie within our borders. He voiced opposition to entrenched realities, including excessive regulations, restrictive permitting, convoluted taxes, disadvantaged inner-city schools, and a broken healthcare system, as preventing what should be sustainable 3%-plus GDP growth. 

We are on board with Jamie here. Urgent reform is needed, but where will it come from? Elon Musk was chastised by the media and the left for his common-sense approach to streamlining federal spending. While DOGE lives on, it has become clear that bureaucrats wield significant influence, and breaking the status quo is a tough task. 

Private-sector solutions are needed, lest 7%-plus annual budget deficits endure.

4. Taxes and Stagflation

Dimon touched on tax policy during the Q&A. It wasn’t a far-reaching part of the talk, but he took a populist stance by calling for the closing of the carried interest loophole, which allows financiers and hedge fund managers to avoid paying federal income taxes on investment earnings. Carried interest was not addressed in the big tax bill.

Bigger picture, he cited macro risks in the form of persistent inflation driven by unabated government spending, high asset prices, and supply chain disruptions. “Stagflation” was even tossed around, though there are no signs that 1970s-era hyperinflation and stagnant growth are on the horizon. Moreover, all the market-based expectation gauges assert that Biden-era inflation is not in the cards.

US PCE Inflation Cools to 2.15%, Down from Above 7% in Q2 2022

Source: St. Louis Fed

US Recession Odds Plunge to 33%

Source: Kalshi

He also mentioned corporate credit spreads. This is something Allio monitors closely, but there’s encouraging news here. Following a brief spike in corporate bond yields relative to comparable-term Treasury rates, both investment-grade and high-yield spreads have since reverted to lower levels. Investors are confident in companies’ ability to make good on their financial obligations—this underscores that irresponsible actions are confined to Washington, D.C.

Investment-Grade Credit Spread Pops and Drops, Now Near Cycle Tights

Source: St. Louis Fed

5. Military Dominance, Balking at Bitcoin

Perhaps the most quotable part of the back-and-forth with the CNBC host, aside from the “cracks in the bond market” quip, was his strong advocacy for bolstering military supplies rather than speculative assets. “We shouldn’t be stockpiling bitcoins,” Dimon argued. “We know what we need. It’s not a mystery.” He demanded loading up on hard resources like “guns, bullets, tanks, planes, drones, and rare earths.”

Of course, the bank CEO indirectly fired proverbial shots at the so-called bitcoin reserve that the administration touts. Earlier in the week, Vice President JD Vance was the headliner at the Bitcoin 2025 Conference in Las Vegas; Trump delivered the keynote there a year ago. True, it’s a stretch to justify the president’s push for American dominance by his championing a digital currency aiming to dethrone King Dollar, but the free market voices its support for the world’s most valuable cryptocurrency—bitcoin notched a new all-time high in May 2025.

To be clear, Dimon not only has a storied history of issuing borderline doomsday predictions, but he has also been a long-standing bitcoin critic. Allio embraces crypto as a valuable diversification tool and part of the technology of tomorrow. Dimon believes in legacy banking and refuses to endorse bitcoin—he's arguably its most outspoken opponent. Today’s investors and future economic leaders demand better. That's our view, at least.

We also believe that the US can walk and chew gum at the same time in this respect. The US can hold a bitcoin reserve while sufficiently arming our military and investing in defense logistics.

Diversification is Good: Gold and Bitcoin Topped the YTD Return List Through May

Source: Goldman Sachs

6. Economic Complacency

Taking a step back, Dimon criticized the "extraordinary amount of complacency" in financial markets, warning that the full effects of tariffs and other risks are yet to be felt. There’s something to this statement. It’s easy to simply point to the American consumer’s propensity to spend, which supports the largest component of GDP growth. 

So long as folks are working, they’ll keep consuming both staples and luxury goods; they’ll continue to travel and dine out. Additionally, dollars will flow into financial markets, and the “buy the dip” mentality will go on.

Black swan events that go on for more than a few weeks may throw sand in the gears of that capitalistic mechanism. That’s why our team monitors leading economic indicators for signs of a slowdown. We don’t simply bank on the status quo persisting, and neither should you. The financial system is still partly fueled by the Biden-era stimulus and debt, which have broadly lifted asset prices. Hence, we now live in a riskier macro construct.

 Vigilance is required—we concur, Jamie.

Record Memorial Day Travel: Three Million+ TSA Checkpoints...

Source: TSA

...But the Personal Saving Rate Has Increased, Indicating Consumer Uncertainty

Source: BEA

Fiscal Challenges Endure

Source: Goldman Sachs

The Bottom Line

Allio doesn’t take umbrage with all of Jamie Dimon’s remarks at the Reagan National Economic Forum in May. We agree with many of his points but also offer nuance regarding some of the comments he made to CNBC. Yes, the bond market must be top of mind—President Trump and Treasury Secretary Bessent made it clear they keep a close watch on interest rates. And is the US fiscal house a mess? Of course. 

We believe, however, that the US remains the best place for companies to do business. Dedollarization began under Joe Biden when the United States limited Russia’s access to the SWIFT banking system, and significant macroeconomic disruptions have since transpired. 

Still, the best and brightest call the USA their home, and the dollar is likely to remain the world’s reserve currency. As we work off years of unchecked federal spending and excessive regulation, a new period of organic, private-sector-led growth is at hand. Investors should not brace for a financial hurricane but position themselves for a fresh wave of American exceptionalism.

A recalibration is underway. Are you ready for it? Invest with Allio today to access our proprietary ALTITUDE AI™ technology, which harnesses large language models to create dynamically optimized portfolios that adapt to market conditions. We bring investment strategies once reserved for the 1% to all investors. Our dynamic macro portfolios put you in charge of your financial future.